Does the rocky start indicate poor returns in 2016?
Global markets are off to a rough start this year. Some media outlets are suggesting the negative results so far in 2016 might provide a good indicator to the direction of the market for the full year. The attached Dimensional Fund Advisors research finds the opposite is more common.
Market declines of 10% and 20% are normal and are typically followed by decent returns so selling after such a decline (i.e. now) usually makes little sense. While a current decline can feel like an air pocket on an airplane, from a historical perspective the losses we are experiencing aren’t unusual and are the necessary expected cost of earning long term returns in excess of bank CDs.
Please read the attached article and let us know if you have any questions or comments.
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